StarWars toy sales fall despite ‘17 film

MIKE TOWNSEND AND CHRISTOPHER PALMERI

The warning signs for the toy industry started last year when Cars 3 — considered a surefire success — proved lackluster for licensees like Mattel Inc.

Now, toymakers’ big bets on movie tie-ins look downright bleak. Playthings based on the Star Wars saga — the franchise that kicked off the whole phenomenon four decades ago — were down in 2017 despite a new film, Star

Wars: The Last Jedi, in December during the all-important holiday-shopping season.

Call it Star Wars burnout, or better yet “movie fatigue,” said Gerrick Johnson, an analyst for BMO Capital Markets. Hollywood and toymakers have fixated on toy-friendly films at a time when kids are increasingly turning to YouTube, Netflix and social media for entertainment.

More than 20 major films, including The Last Jedi, had robust toy-licensing programs last year. A decade ago, it was about half that. Movie attendance in the U.S. has dropped almost 14 percent in that span.

“There are so many screens now; kids aren’t just at the movies,” Johnson said. “A movie doesn’t have the same resonance it used to.”

While Star Wars was still the top-selling toy line during the nine-week holiday period, it fell to second place overall last year and below the alltime high seen in 2016, according to data from market research firm NPD Group shared with Bloomberg News.

“Star Wars is a force to be reckoned with in the toy industry,” the brand’s owner, Walt Disney Co., said in a statement. “It remains the leading film-driven property for the entire year.” After a decade without a

Star Wars film, Disney has released three movies since December 2015, and another one is coming in May. The latest installment, The Last

Jedi, didn’t include many new memorable characters beyond those introduced in the preceding film, Johnson said. That left fans looking for newness elsewhere this year, leading to weaker results than expected, he said.

U.S. sales of the brand’s toys slowed in late 2017, Drew Crum, an analyst for Stifel Nicolaus & Co., wrote in a note to clients earlier this month. This was despite Last

Jedi being the top-grossing film released in the U.S. last year at $596 million.

Adult collectors, who grew up with the brand, are still buying a lot of merchandise when the toys come out, but demand dies down afterward, according to Johnson.

That doesn’t bode well for Hasbro, which has the main

Star Wars toy partnership, or Jakks Pacific Inc., which has a secondary license. Jakks said it couldn’t comment on Star

Wars sales, but that merchandise tied to Moana, another Disney film, “remains very strong.” Hasbro declined to comment.

The Star Wars performance could hinder Disney’s bid to revive growth at its consumer products division, where sales fell 13 percent to $4.83 billion for the fiscal year that ended Sept. 30.

The September bankruptcy filing of Toys R Us Inc., which makes up about 15 percent of the market, added to the challenges for Star Wars sales growth this year, though the company continued to market the toys.

Visitors to the Toys R Us store on Los Feliz Boulevard in Los Angeles recently had plenty of Star Wars merchandise to choose from. A whole aisle included everything from a $3.99 Millennium Falcon Hot Wheels car to a $250 AT-ACT remote-controlled vehicle that walks and fires Nerf projectiles.

Tracey Gordon, a mother from Glendale, Calif., shopping at the store, said her three boys, ages 2 to 7, aren’t

Star Wars fans even though she wore a Princess Leia costume on Halloween for years when she was younger.

“It’s a generational thing,” she said, adding that her nephew likes the toys largely because his dad “drags him to see the movies.”

More than 20 major films, including The Last Jedi, had robust toy-licensing programs last year. A decade ago, it was about half that. Movie attendance in the U.S. has dropped almost 14 percent in that span.